Negotiating Zoom Agreements: What Really Matters

Tony:
Hello, I’m Tony Mangino from TC2, and this is Staying Connected—where we talk about what really matters to enterprise buyers navigating today’s technology and sourcing decisions.

I’m joined today by my colleagues Theresa Knutson and Julie Gardner and we’ll be diving into negotiating enterprise agreements for Zoom—specifically software, professional services, and transport components. We’ll also unpack tricky contract terms plus understanding how service alternatives and benchmarking can strengthen your negotiating position.

Let’s start simple. When companies say they’re “buying Zoom,” what are they actually purchasing?

Julie
Great question—enterprises purchase Zoom licensing and other similar tools for internal communications- referred to as Unified Communications or UC  as well as external customer facing communications- Contact Center or CCaaS;  today we will focus on internal Communication usage of Zoom for UC

• Improves collaboration (especially remote/hybrid work)
• Reduces switching between apps
• Cuts costs (fewer separate systems)
• Speeds up communication and decision-making

Zoom costs are made up of

1. Software licenses – vary based on the products you are buying and are often bundled.  Options include Zoom Phone, Zoom Workplace Enterprise and Enterprise Plus, Meetings, webinars, rooms, etc. (often called Enterprise named users, webinar size specific licenses)
2. Professional services – Deployment, onboarding, integrations, custom support including options for proactive monitoring, reporting and MACD support plus ad hoc support for big events
3. Audio Transport for Enterprise Licensing– Rates for dial in usage for zoom meetings (toll free, premium and call out)

And each of these has different pricing models and contractual implications. A mistake I see often is organizations negotiating them as a bundle without understanding cost drivers individually.

Tony:
So where do companies usually go wrong?

Julie:
Not knowing their user base in detail. You need clarity on:

• Total number of users
• Types of users (light vs. heavy, webinar hosts vs. attendees)
• Geographic distribution

You also need to understand how other tools in this space have evolved since your last negotiation with Zoom.

Tony:
Let’s talk leverage. How important is it to understand alternatives like Microsoft Teams?

Julie:
It’s critical. Platforms like Microsoft Teams can overlap significantly with Zoom, especially if you’re already invested in the Microsoft ecosystem. Even if you don’t plan to switch, having a viable alternative changes the negotiation dynamic.
This is where an RFI—Request for Information—comes in. It doesn’t have to be a full RFP process, but:

• It helps validate requirements
• Surfaces competitive pricing and capabilities
• Signals to vendors that you’re evaluating the market
• And it often reveals features or bundling options you didn’t initially consider.

Tony:
How do you know if you’re actually getting a good deal?

TK:
Benchmarking. You need to compare your Zoom pricing against deals that are similarly sized customers are getting. Here at TC2 we regularly provide this support and insight to compare your current and proposed pricing against:

• Industry peers
• Similar deal sizes
• Market averages

Tony:
Without benchmarking, you’re negotiating in the dark. Suppliers have far more pricing data than you do and they like to bundle things to make the pricing much more vague.

TK:
Exactly. Even informal benchmarks can dramatically improve outcomes.   I’m actually amazed at the significant variance in pricing across deals of similar size—upwards of 35% differences between best and worst pricing.

The benchmarking should cover all costs—enterprise named users, support costs, webinar size costs and the underlying voice transport rates by country and traffic type (mobile/landline for toll free, premium and call out)

Tony:
Let’s talk contracts. MSAs can get tricky—especially with prepayment and renewals.

TK:
Absolutely. Four big red flags:

1. You may negotiate for 60 or 90 day payment terms but Zoom typically requires Annual prepayment in advance – This shifts all financial risk to the customer
2. Term and Auto-renewal clauses – Typically 3 year terms but often coupled with auto renewal clauses that only give short notice period.    Eliminate auto renewal language and opt for extension years at your own discretion.   
3. Be aware of auto price increases-language like have increases in prices for any Service  not exceedog five percent (5%) annually per license over and above the subscription fee paid by Customer.    You can negotiate this in an RFP.

4. Understand your tax jurisdiction. Zoom assesses state and local taxes in certain states and that can add 8%-10% to your costs.

Tony:
From an IT perspective, that’s dangerous. Your usage could change significantly year to year, especially with hybrid work trends.

TK
Best practice is to:

• Negotiate flexibility in license counts
• Don’t Commit to 100% of your counts
• Perform periodic optimization reviews to ensure that you are purchasing the types and quantities of licensing that match your user personas
• Extend notice periods for cancellation

Tony:
So don’t just accept the default terms?

TK:
Never. These are highly negotiable.  Your ability to negotiate key terms is significantly improved if you are in a leveraged RFP scenario.

Tony:
SLAs are always highlighted in these deals. Are they actually useful?

Julie:
Honestly, not as much as people think. SLAs will vary by product.  Meetings, Webinar and Chat have an up-time SLA of 99.9%.   Then SLA penalties for 3 tiers of SLA failure that can be customized 

• SLA penalties 10% for 1^st month, 20% for second month and 30% for third month
• SLA penalties don’t cover real business impact
• Zoom is in the business of having their platform readily available for customer usage so if they fail, it impacts all customers. 

Short answer: Zoom does not publicly report its annual uptime percentages.  It’s last major outage happened in Apr 2025 reportedly due to a DNS issue with GoDaddy .

TK:  SLAs are often more about optics than protection. Instead, focus on:

• Operational reliability track record
• Required support for you organization; premier/premier+TAM that come at an incremental cost often quoted as a % of your base.    This incremental support isn’t cheap.   You have ability to define your priority 1 through 4 outage definition and response times.  
• Escalation paths—know who to call and the chain of command above your direct account team
• Use the Zoom portal to manage your environment and leverage reporting available there

Tony
Let’s wrap this up. What should listeners remember when negotiating a Zoom enterprise agreement?

Julie

• Understand your current costs—look at the invoice details and your current contract pricing
• Map actual usage before buying
• Plan for future scalability
• Understand viable alternatives like Microsoft Teams

TK:

• Use an RFI or an RFP if you can, to build leverage
• Benchmark pricing before signing/extending
• Challenge prepayment terms
• Eliminate auto-renewals and opt for optional renewal years at your own discretion
• Understand tax implications
• Negotiate flexibility, not just price

Tony:
Thanks Theresa and Julie for an information packed episode on negotiating enterprise Zoom agreements! 

To our listeners, if you would like to learn more about how to prepare for an upcoming Zoom renewal or best practice for sourcing these services, or if you’d like to discuss other technology strategy, sourcing and cost reduction needs with Theresa, Julie or me, or any of our TC2 and LB3 colleagues, please give us a call or shoot us an email. 

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